As a continuation of the FCC’s Special Access inquiries, the FCC has opened an investigation of certain large ILEC tariffs governing special access. The FCC is requesting data from AT&T, Verizon, CenturyLink, and Frontier concerning their tariff provisions that lock customers into term and volume commitments. It is important to note that effective November 18, 2015, all ILECs must conform with the IP pricing rules in the Copper Retirement Order (discontinuance, reduction or impairment of TDM service in a transition to IP requires wholesale access rates, terms and conditions comparable to the TDM service previously provided) until the special access rules are determined.

The FCC’s preliminary review of the results of the Commission’s special access data collection shows that, as of 2013, ILECs received roughly three-quarters of the approximately $20 billion in annual revenues from the sales of DS1 and DS3 channel terminations, and received close to two-thirds of all revenue from TDM sales. CLECs and other carriers have complained that certain pricing plans have locked customers into TDM volume commitments that prevent them from migrating to other carriers or to Ethernet from TDM. The FCC is investigating whether the large ILECs’ tariff provisions are just and reasonable or anti-competitive.  Specifically, the FCC has required the large ILECs to make a direct case on why the following practices are just and reasonable:

  • Use of Shortfall Fees – Penalties if a customer does not meet its volume commitment
  • Upper Percentage Thresholds – A certain percentage of all circuits must be contracted to the large ILEC
  • Overage Penalties – Penalties if a customer exceeds its volume commitment
  • Certain Long-Term Commitments – Long-term commitments can lock customers into TDM service for long periods of time
  • Early Termination Fees – Penalty payments for the remainder of the term commitment
  • Special Access Commercial Agreements Contain Provisions That Affect Tariffed Special Access Charges – Can contracts remain between two carriers or do all provisions have to be included in a tariff?

The large ILECs must make a direct case that their tariffs are just and reasonable by December 18, 2015. No ILEC or CLEC other than the named large ILECs are required to file a response. However, if any company wants to file in opposition to the large ILEC practices, that filing deadline is January 21, 2016. The large ILECs then have until February 22, 2016, to file their rebuttals to any oppositions. JSI will provide additional information once the large ILECs have filed their cases.

Please contact Valerie Wimer at 301-459-7590 if you are interested in filing opposition or would like more information about the FCC’s investigation of the large ILEC tariffs.

Source: JSI e-Lert